Rents rise as house price growth slows – ONS

Landlords saw average UK private rents rise by £52 a month over the year to September, taking the monthly figure to £1,406.

The Office for National Statistics’ (ONS) provisional figures put annual rent growth at 3.8%, unchanged from August.

The North West recorded England’s strongest annual increase at 5.7%.

London and the South East had the lowest rates, both at 3.5%.

Rent growth across Britain

England’s average monthly rent reached £1,466, up 4% over the year, while Wales recorded a 4.1% increase to £848.

In Scotland, rents rose by 0.7% to £1,011, the lowest annual growth since the series began in January 2016.

Northern Ireland’s figures cover an earlier period, with average rents reaching £879 in July, up 1.7% over the year.

House price growth slows

Meanwhile, the ONS data shows the average UK house price reached £273,000 in August, with provisional annual growth of 0.9%, down from July’s revised 1.2%.

It was the fourth consecutive month of slowing annual growth, driven by weaker rates across six of England’s nine regions.

Prices in England rose by 0.4% to £294,000, compared with increases of 3.1% to £216,000 in Wales and 2.9% to £198,000 in Scotland.

London recorded an annual fall of 2.2%, driven by large declines in flat prices, while Northern Ireland’s average reached £202,000 in the second quarter, up 9.2% on a year earlier.

Property sector reaction to ONS rent and house price data

Alex Upton, the managing director of specialist mortgages at Hampshire Trust Bank, said: “Higher borrowing and operating costs have changed the calculations, and experienced investors are looking much more carefully at where they commit capital.

“The conversations we’re having are increasingly about how a property will perform over time, what it adds to an existing portfolio and whether there is scope to improve returns through refurbishment or a different investment strategy.”

Nathan Emerson, Propertymark‘s chief executive, said: “Landlords are also having to adapt to changing market conditions and balance rising costs with the need to keep homes affordable.”

He added: “Creating the right conditions for landlords to invest in the private rented sector and increase the supply of homes will be essential to easing pressure on rents and improving choice for tenants.”

On house prices, Mr Emerson said: “It is positive to see the housing market showing resilience as autumn begins.

“It has been a challenging year for buyers facing affordability pressures, particularly amid rising energy and fuel costs, but house prices continue to demonstrate resilience across many regions.”

Tom Bill, the head of UK residential research at Knight Frank, said: “Rental value growth continues to be supported by tight supply and landlords setting higher asking rents to compensate for the greater risks they face with the Renters Reform Bill around void periods and selling or gaining possession of their property.

“The upward pressure is likely to continue as legislation like the Minimum Energy Efficiency Standards is on the horizon and may require extra expenditure.”

He added: “UK house price growth has ground to a halt this year as the impact of higher mortgage rates takes its toll on buyers.

“Declining mortgage approval numbers show transaction activity will also decline in the final months of the year.

“The outlook for the UK housing market hinges uncomfortably on an overseas geopolitical risk, but downward pressure on prices could reverse quickly if the unpredictable Middle East conflict de-escalates or ends. As affordability constraints bite, it is no surprise to see the biggest price impact in London.”

Richard Donnell, executive director of research at Zoopla, said: “House price inflation is slowing as higher mortgage rates hit buyer enquires and the number of sales agreed.

“Zoopla data shows that there are fewer sales right across the country as homebuyers adopt a wait and see approach ahead of next week’s Budget.”